Shares in Sonoro Energy rose 11% on Thursday following its announcement that the company, through its wholly-owned subsidiary, Sonoro Energy Iraq B.V. (“Sonoro Iraq”), has entered into a Farmout Agreement with Geopetrol International Holding Inc. and its subsidiary, Geopetrol Iraq Corp.
The Agreement provides for the assignment by Sonoro to Geopetrol of a thirty percent (30%) participating interest in the Asphalt License Agreement among Sonoro Iraq, the Al-Salah ad Din Provincial Government and Berkeley Petroleum Mesopotamia Asphalts Limited, with Sonoro retaining a forty percent (40%) participating interest in the License and operatorship.
The Agreement is subject to certain conditions being completed, including the approval of the Government and the TSX Venture Exchange.
Pursuant to the Agreement, Geopetrol will pay to Sonoro an initial cash payment of US$3 million as partial reimbursement of past costs and fund the first US$9 million of the costs to be incurred by Sonoro and Geopetrol in respect of the License. The Company and Geopetrol intend to use the US$9 million to conduct drilling operations on the North Salah ad Din prospect.
Under the Agreement, Geopetrol will also participate in a private placement for 46 million common shares in the capital of Sonoro at a price of CDN$0.09 per share for aggregate gross proceeds of CDN$4,140,000. Following the Private Placement, Geopetrol will own approximately 17.5% of Sonoro’s outstanding common shares. In conjunction with the closing of the Agreement, Sonoro will also pay to an arm’s length third party a finder’s fee equal to three percent (3%) of the total amounts payable by Geopetrol under the Agreement, with two percent (2%) of such finder’s fee payable in cash and the remaining one percent (1%) payable in common shares of Sonoro at a price per share equal to the closing market price of the common shares immediately prior to the announcement of the Agreement.
Geopetrol International is part of a privately held group having combined production of approximately 5,000 barrels of oil per day from operations in Vietnam, Yemen, France, Tunisia, Canada and India.
Richard Wadsworth, Sonoro President & CEO said “Geopetrol brings a wealth of international experience in both the oil and gas upstream and services businesses as well as bringing significant financial strength to our partnership. With Geopetrol we will be looking to accelerate the drilling of the North Salah ad Din prospect as well as other identified prospects in the Salah ad Din Province”.
Gaston Rebilly, Geopetrol International’s President, commented “we are pleased to have the opportunity to farm-in on what we believe is a potential world class resource in the Salah ad Din Province of Iraq. Sonoro has developed a range of excellent drilling prospects and we look forward to working with Sonoro to jointly explore and develop these prospects”.
FirstEnergy Capital LLP acted as exclusive financial advisor to Sonoro with respect to the Agreement.
The Company has provided potential drilling services providers with the information necessary to submit a proposal for the drilling of initial wells in the Company’s North Salah ad Din prospect and has received offers from interested service providers.
The Company is also pleased to announce that Mr. David Little, MBA, will be joining the Company as Chief Financial Officer. Mr. Little is the founder and Chairman of Black Stag Resources Inc., a private Australian oil and gas explorer. From early 2009 to November 2011, he served as Chief Financial Officer of Gallic Energy Ltd. In 2002, he founded Avery Resources Inc., an oil and gas producer and explorer with operations in both Australia and Canada. In conjunction with his appointment, Sonoro has granted to Mr. Little 250,000 stock options under the Company’s stock option plan at an exercise price of CDN$0.10. An additional 100,000 options, at an exercise price of CDN$0.10 have also been granted to consultants of the Company.
The Company would like to thank Mr. Lance Mierendorf for his contributions as Chief Financial Officer over the past year and wishes him the best in his future endeavors.